How Branding Works
Rostec, a public Russian corporation, works on upgrading communication systems and on building strong brands. It aims at internal consensus between top and middle managers, reaching target audiences, and translating and implementing the company’s image of the future. Technodynamika, Kalashnikov, Baikal, KRET, and Rostec itself are all part of the bigger corporate brand portfolio.
Farther reaching communication networks and rapid changes in the world market have made corporate branding of paramount importance. It is essential to modern industrial companies. Corporations operating in countries with rapidly growing economies have to invest in building and developing their brands, thereby increasing their competitiveness. As a country with a rapidly developing economy, and as a member of the BRICS, Russia can’t help but respond to the challenges of our time. Russia has taken a number of measures to restructure the communications industry, and achieve parity – or even superiority – over its foreign rivals.
The brand is integral to increasing a company’s capitalization and investment attractiveness. It plays a key role in the global industry, and brings value added to companies.
Rostec is a state corporation that manages a significant part of the Russian industry. It has been a pioneer in upgrading its communications systems and developing a brand portfolio.
The company commands a major portfolio of brands. Many of them are known worldwide, such as KAMAZ, Lada, Rosoboronexport, Russian Helicopters, and, last but not least, Kalashnikov.
In 2012, we took the first step towards restructuring the Rostec brand portfolio. It was a rebranding of the state corporation itself. A development corporation that finds a balance between the state’s strategic interests and commercial purposes needs a new business-model. Therefore, we needed a new brand to achieve the highest level of openness for partners, investors, and the media.
The corporation developed two fundamental principles as the ideological core of its brand: the concept of ‘partnership in development’ and the idea of active management of the future. The historical name of the corporation – Russian Technologies, which was inherited from the state – was replaced by the shorter, more resonant ‘Rostec.’ A new logo was designed; it is an open square, which symbolizes a window to the world, and also shows a frame of focus. The corporation’s ‘partner in development’ slogan reveals our new philosophy.
Brand development was supposed to show the state corporation’s openness to the world. This openness has allowed Rostec to attract international technological and financial leaders, and to expand its presence in the global market.
Success was not long in coming. There was a steady growth in profits (+4%) in 2013, and an increase in the number of foreign relationships. The amount of exported products went up and Rostec attracted more investment from abroad. The performance and perception of the brand improved among target audiences – the image of the corporation as a powerful player, the flagship of the Russian industry, and a key supplier of innovative technologies was strengthened in the collective consciousness. In 2013, the corporate website was visited by 800,000 users and Rostec’s presence in the Russian print media increased 206%. The field of information in 2014 exceeded that of 2013 – there were 1.5 times the number of publications, and 1.7 times the total media index.
House of brands
In order to strengthen its strategic marketing and rebrand several of its key holding companies, Rostec followed in the footsteps of the state-owned corporation. Previously, Rostec and its subsidiaries generally kept information secret. Now they are promoting a more open public image, and they have begun to speak using clear verbal and visual language.
In 2014, Kalashnikov Concern – Russia’s largest producer of small arms – was rebranded. Throughout its 70-year history, Kalashnikov’s brand was not formed intentionally. Nobody managed it, and no one saw it as a globally important asset. After the collapse of the USSR, the licenses to produce Kalashnikov machine guns (issued by member countries of the Warsaw Treaty Organization) lost their power. Many companies continued producing unlicensed guns, thereby lowering the Kalashnikov standard of quality and its reputation as a legendary machine gun. Russia filed many lawsuits over the subsequent 20 years in an effort to preserve the brand, and defend its exclusive right to produce authentic Kalashnikovs.
In 2013, arms factories in the Udmurt Republic created a new management system by bringing together a number of small industrial clusters in Izhevsk. These enterprises formed a single entity and launched a comprehensive facilities upgrade. Today, the arms factories in Izhevsk have been given a second life by the Kalashnikov Corporate Group. The upgraded Kalashnikov brand has now become one of its biggest assets.
Studies of the global market for weapons brands and of the heritage of Kalashnikov helped to redesign the brand portfolio, based on a ‘house of brands’ principle. A corporate brand and three product brands were developed using this structure: Kalashnikov, Baikal, and Izhmash.
The new changes promoted a corporate brand that has become the face of the group in the domestic and foreign markets, a symbol of change, and attracted investors and revived the domestic small arms industry.
We reinvented and preserved the Kalashnikov name for the military weapons brand. The current military weapons brand philosophy can be expressed with the slogan ‘protecting peace,’ which dominates all company communications and its design. We market the Kalashnikov assault weapon as the only one in the world that enjoys a positive reputation. This was achieved thanks to the significant role the gun played in peoples’ struggle for independence, peace, and the right to sovereignty. Indeed, hundreds of millions of people around the world think of the Kalashnikov machine gun in the context of struggles against imperialism and colonial exploitation, democratic movements, and the fight for freedom and justice.
In addition to the Kalashnikov Corporate Group, as well as the Kalashnikov military weapon brand, we have two other well-known brands in our portfolio: the ‘Baikal’ and the ‘Izhmash.’ Baikal, which is internationally recognized, encompasses the production of hunting weapons. The corporate group deals with the sporting weapons segment under the Izhmash trademark. Nowadays, Izhmash is the main Russian brand of biathlon rifles, and other competitive and recreational weapons.
About two-thirds of the Corporate Group’s sales take place abroad. A modern and technologically advanced image strengthens our foreign position and the Group’s desire to expand further into foreign markets. On the whole, the Kalashnikov Group’s portfolio of independent product brands allows us to reinforce the company’s long-term policy and lay a solid foundation for the further development of the Russian arms industry.
On the cutting-edge
Aviation Equipment is another company that has rebranded. In 2009, we merged 35 companies scattered throughout the aviation industry. After Aircraft Equipment had been internally organized, it took on the ambitious task of becoming a first-tier supplier in the Russian market and declaring itself a reliable partner for major foreign players. Thus, in order to attract new partners, we undertook a comprehensive transformation of the holding company’s image, which required new marketing in both the foreign and domestic markets.
We began the Aircraft Equipment rebranding project in 2014. As a result, the holding company developed unique marketing techniques, received a new name (Technodinamika), a slogan (‘Standard of vanguard’), and a design system. The basic values of the new brand’s philosophy are innovation, responsibility, and moral intelligence.
The aerospace industry is at the forefront of scientific and technological progress. The future of the industry depends on the complex work of engineers. It is no accident that Technodynamika has started to market itself as an organization of professionals who solve important tasks, such as the development and production of aviation equipment or the effective and high-quality life-cycle management of aircraft systems. A comprehensive internal study helped us realize that the foundation to long-term success was based on the traditions of the Soviet school of engineering, creativity, and strict management standards. These tenets also help the Technodinamika staff resolve non-standard tasks.
Technodynamika’s brand is a key intangible asset, and the core of all the holding company’s communications. It will help carry out all the fundamental problems in the field of strategic communications. This, in turn, requires the involvement of all target audiences, which can be divided into two categories: the external audience (Russian clients, foreign partners, government agencies, the labor market, and specialized educational institutions) and internal auditors (human resources at all levels of the corporation).
In relation to the external target audiences, we aim to market the holding company as a reliable supplier of aircraft systems that offers a number of advantages to both Russian and foreign partners.
The new brand offers Russian customers the holding company’s ability to act as an integrator of aviation systems, combining all its production and intellectual resources, and its capacity to take part in new Russian projects, such as the Sukhoi Superjet and the MS21. It is also important to note that the Technodynamika brand provides important assurances to other target audiences. It guarantees a unique experience on the most difficult and non-trivial projects for young engineers, and provides them with opportunities to express themselves. It also helps the government develop and maintain unique human capital in the country.
In internal communications, the holding company’s core values, such as innovation, moral intelligence, and responsibility, help unite people at all levels around our goals. On the whole, the new Technodynamika brand means real responsibility and a serious promise to the target audiences.
In 2013, Rostec added a third brand, ‘KRET,’ to its portfolio. KRET was previously called Radio-electronic Technologies Corporation. The rebranding of the company, whose products are mainly of military importance, helped it become more open and transparent for Russian and foreign investors and partners, for the media, and other external audiences.
The KRET logo, which reflects the complex essence of the company, is integral to the new brand. It is based on three elements. The first is an allegorical image of three crowns and the Russian double-headed eagle (which symbolizes the holding company’s ties with Russia and its implementation of national sovereignty); the second reflects the three branches of the armed forces, which are KRET’s main customers; and the third one reflects KRET’s three core values: adaptability, contemporaneity, and the human dimension of their products.
On the whole, the versatility and strategic importance of the corporate group, together with quality aligned communications, allows KRET to raise its intangible assets, increase the capitalization of the company, and contribute to the development of the country’s electronics industry.
In the foreseeable future, Rostec plans to continue consolidating its holding companies’ intangible assets. Today it is obvious that these measures have helped to significantly strengthen its position and its major assets, both in the domestic and foreign markets. Branding allows us to communicate corporations’ core competencies and their strongest sides, which naturally reinforce marketing efforts. Our companies are becoming more open and up-to-date, and we are communicating our advantages to the international market more effectively.
In terms of how branding operates in the specific terms of the Russian industry, I would like to emphasize a number of effects. It reflects and clearly formulates our business strategy, turning to a point of internal consensus between top and middle managers; iit clearly communicates information to the external audience, be it the state, customers, the labor market, local people, or partners in the financial sector; and branding allows our businesses to earn average to premium market prices and ensure the stability of future sales. Thanks to strong branding, we are able to negotiate more effectively with partners and suppliers, as well as pursue a more favorable environment to attract debt and share capital. A strong brand also allows you earn and keep employee loyalty, and attract staff on more favorable terms. From the standpoint of long-term development, Rostec companies, in particular, need to build strong brands. Most of them are on the verge of a great leap forward, and they are in dire need of the support, enthusiasm, and energy of young professionals, and of favorable conditions provided by the state, business partners, and the financial sector. Today, we are concentrating resources from many different industries so that we can make a qualitative transition to new technological levels. To realize this goal, we are developing brands that translate our ideals, our values, and our image of the future, as well as the strategy and tactics to build it. It is essential for the Russian industry to take back its leading position on a global scale.